Demonetisation blues: Sales of TVs, refrigerators fall 38% in November

Experts say the industry was poised to report one of the best October-December quarters after six years, but demonetisation played spoilsportWritankar Mukherjee | ET Bureau | December 30, 2016, 09:23 IST

( Thinkstock)It is official. Demonestisation has dealt a big blow to the consumer goods sector.

Sales of televisions, refrigerators, washing machines and microwave ovens declined 38% in November compared with the same month last year, wiping out the record growth rate posted by the Rs45,000-crore industry during Diwali. Experts say the industry was poised to report one of the best October-December quarters after six years, but demonetisation played spoilsport.

Data from retail sales market tracker Gfk-Nielsen reveal flat panel television sales were down 30.4% in value terms and 26.6% in volume terms in November. Appliances’ sales took a bigger hit with refrigerator value sales declining 41.2% and microwave ovens slipping 53% during the month. These numbers are for sales at both brand-exclusive shops and multi-brand stores across the country.

This drop in sales come on the back drop of a record October sales, which saw a growth of 75%, with categories such as flat panel television and washing machine reporting 94% and 116% growth, respectively, show Gfk-Nielsen data.

According to industry executives, October gains will get completely wiped out during the full quarter since sales in December too are down around 15%.

“Even if we consider that Diwali last year was in early November, the industry sales would have been, at worst flat, during the same month this year, considering the market was growing at 20% during usual time. This decline in sales is purely the effect of demonetisation, which will ultimately lead to a flat quarter at best,” said Godrej Appliances executive vice-president and business head Kamal Nandi.

Around 60% of white goods and television purchases in India used to be in cash, and the remaining was through debit and credit cards, and consumer finance schemes.

Even as companies are seeing a slow pick up in sales in big cities, smaller cities and towns continue to fare poorly, said industry experts.

“Sales continue to be down for retailers, who have not yet started accepting digital payment or where consumer finance penetration is low. This is due to the fact that cash-based transactions are now just 10-15% of overall purchases and this may continue to do so. Hence, in December we expect sales to remain down by around 10%,” said Videocon chief operating officer CM Singh.

A senior executive with a leading Korean consumer electronics maker said that consumers are postponing their discretionary purchases. “While January may continue to be down due to rise in prices of single door refrigerators as energy efficiency norms have been tightened, we expect normalcy from February because of pick-up in air-conditioner and refrigerator sales in south and west,” he said. While television makers have already reduced their production due to fall in sales, appliance makers are continuing with production of cooling products such as refrigerators and air-conditioners in anticipation of a warm summer next year.

The industry has also postponed the price hike, which happens around January, due to poor demand. The companies are now busy tightening costs and marketing spends as also revising their growth estimates downwards till the next quarter.